Thursday, August 13, 2009

Long Calls

Using the previously specified three bull marketing strategies, recent trading has been consistently profitable, but at a very slow pace; I suspect that I'm trading with amounts that are too small, and more important, adopting a risk posture that is too low.

The next step to consider, is to set aside a small portion of the portfolio for some aggressive risk-taking; if the initial trades work out, the winnings can be leveraged for increased levels of risk.

The strategy is to identify stocks that are likely to go up fast in the very short term (0.5 - 3 days), buy long calls, and sell them when the stock upswing hits a specified price.

One way to identify these stocks is to look at recent pops in stock price. Another way is to find stocks in the same industry as a pop, especially those that are about to announce earnings. If the industry as a whole is trending upwards (say, a sector fund), then all the better.

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